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"For you, diamonds are a black hole. A mystery. You don't know what it's all about. The diamond business is one of the most complex in the world. I was born and bred a diamond producer. I've been polishing them since I'm 16 years old."

He became exasperated when he said that. Until that point in the interview, Lev Leviev had been cool and collected, carefully weighing each word he spoke. But when our conversation reached diamonds and we began to gingerly ask about the great secrecy shrouding his business, he lost his composure and began firing off answers with pique.

Leviev granted an exclusive interview to Haaretz on the occasion of a 70th birthday. Not his; that of his company Africa Israel, which he bought from Bank Leumi seven years ago.

Israel had greeted the Israeli-Russian businessman with a modicum of suspicion. Now, seven years later, Leviev feels he has a lot to be proud of. He bought Africa Israel at a company value of $400 million, distributed $180 million worth of dividends and as of last Thursday morning, the company was worth $950 million. At least it was when the interview began. By the time it ended, Africa Israel's value on the Tel Aviv Stock Exchange had crossed the billion-dollar mark, after a 6.5 percent leap on the stock market. That benchmark attests to the tremendous reversal in the way Tel Aviv views Leviev.

Once the investment community had been wary. On Thursday the leap was triggered by Leviev's offhand remark that he meant to lift the company's value to $5 billion within another seven years.

Undersea diamond mine

Any other businessman promising 26 percent yield a year for an investment company that size would have been laughed out of town. But Leviev has a record to back his words.

At the time, the $400-million company value Leviev paid for Africa Israel had been considered excessive. Since then, real-estate prices have done nothing but retreat, and that's Africa Israel's main focus. The economy also deteriorated, as did the fortunes of most investment companies. But under his stewardship, Africa Israel bucked the trend. Every shekel invested in its shares seven years ago is worth NIS 5 today.

We came to talk about Africa Israel, but all too fast what we really wanted to talk about was Africa itself, specifically Namibia. We wanted to talk about Leviev's giant undersea diamond mine. Leviev didn't want to talk about diamonds. That is his private business. But he could be persuaded, because unlike real estate, which is pure business, he loves diamonds.

You usually stay away from the press. Last week you held a press conference and now you're granting an interview. What happened?

Leviev: "We are celebrating Africa Israel's 70th birthday. This is just our way to thank our employees and partners in Israel and abroad. I don't see it as a PR act. The company has scored remarkable achievements during an especially rough period."

Yet you've drummed up a lot of noise in the last couple of days.

"Well, the press finally decided to write up something positive. Maybe they're tired of reporting only about people losing money."

$5 billion in seven years. Isn't that a tad excessive?

"That has been Africa Israel's growth rate so far, and we went to continue growing at the same rate."

There is a difference between growing from $200 million (after the dividends) to a billion, and expanding from a billion to 5 billion.

"Of course there is a big difference, that is why we're going abroad. Only abroad could we reach a company value of $5 billion. We are already major players outside Israel. We began well and mean to develop even better."

You know mathematics. To quintuple your value in seven years means to generate a 26 percent yield a year. You could count on one hand the number of investment companies that achieved that over time. I think that aside from the legendary investor Warren Buffett, very few have achieved such yields.

"First of all, I'm not Buffett. If we achieve $5-billion value, fine. If not ... well, it isn't in the company's working plans in any case."

Ah, it was more a call to the flag for your management and employees?

"It was a vision, most certainly a call to the flag. When you visited me a few years back you told me that big companies that don't concentrate on a certain area don't succeed. I know that there are ups and downs. I think all companies go through such things. That is why people diversify and build holding companies. If you remain focused on a single field, you expose yourself to vast damage.

"Say you work in high-tech. You can be ruined overnight. If you diversify you always have opportunities. I'm not dead set on any one thing. I look at the whole country, at the economic policy and I decide. I'm not dead set on working in the U.S. or Russia. I invest only when I think the timing is ripe."

But it is very hard to generate yields at that level over time from a diversified portfolio.

"You want to talk about yields. Okay, take Prague. In 1998, after the crisis, we bought lands in Prague. In the early 1990s, after perestroika, all Europe's investors rushed to Prague and at first, they lost tons of money. We arrived after the Europeans had been disappointed by the bureaucracy. We opened offices, we started to learn the business, we bought lands. Africa Israel invested 20 million euros in the Flora shopping mall project. Today people talk about multiples representing dollar yields of 8 percent. We, on our 20 million euros, could earn 60 million euros. That is a good investment at the right place.

"Or look at Moscow, the most central road, at the train station, Byeloruski Street by the Kremlin, the most crowded place in Moscow. The city couldn't solve the problem of the traffic jams. We entered a tender and won a $200-million project. Why? Because we offered the best engineering solutions. I believe our yield, when we finish the project, will make the Prague Flora look pretty sick. We are looking at huge projects, of $50 million to $200 million each."

And the risks are commensurate?

"Russia's economy is growing astonishingly. Everybody says real-estate prices are high. Offices in Moscow cost $2,500 per square meter, but try to buy in London or Manhattan, where prices can reach $7,000 or even $10,000 per square meter. I don't see any risk. We get in at the right time, when everybody else is just starting to learn the market, and we get out when they're done learning."

How do you learn the market?

"You have to know very well who you're with wherever you go. You need the right partners, who know the country and the bureaucracy, which can save you time. Instead of wasting time learning, you start doing business from day one."

Africa Israel is diversified into real estate, fashion, industry, energy, trade and lately communications, too. You personally devote much of your time to diamonds. How can you specialize in so many areas?

"We don't mean to stay in fashion over time. We want to better the business and get out. Regarding industry, trade and energy, we work with good partners, each which is an expect in its field.

"Look at (the energy company) Alon Dor. This is a company that began from gas stations at kibbutzim and today it's a giant company operating around the whole world. We focus on companies that could be giants and get rid of the little companies that have no chance of growing."

Why should Africa Israel do better than IDB, Koor and the rest of the diversified conglomerates that have not done well?

"IDB suffered from management problems in general and now you see what happens when people who want to succeed come in - they institute change, they know what to sell and what to buy. It all depends on the vision of the management.

"In my opinion, the core of our profits will always be real estate, infrastructure, BOT [build, operate, transfer ownership] projects. We do it in Israel and hope to win projects like that in Russia. Last night we signed a light rail deal, at an investment of $2 billion. We have not a little experience in infrastructure. Look at the Trans-Israel Highway. We had quite a few nightmares there. At the start everybody ran away, but we held fast and today there's a road. Real estate is our heart and all the rest is financial investments. You can expand, or get out."

In what is your philosophy unique?

"I don't try to learn what other people do. I do what is clear to me; I tread where I feel the land to be firm. I don't become highly exposed in new areas, so if we aren't satisfied we can get out with minimal damage. I don't think that reading books by people who made it will help me much. I have to trust my own knowledge, travel the world more, keep my finger on the pulse, check political situations in the countries where I invest. Everybody believes they're talented, but something goes wrong at the last minute and all the money is gone, because a lot depends on luck."

In short, it's the Leviev method. You have no other models.

"You could sum it up that way, I think. Books are for university, not for me. When everybody was talking about high-tech, I received offers but we stayed back, with our building blocks. And look, so far the blocks have made more money.

"In general the stock market is a good thing, but you can't do business just to make the shares go up. The public invests in the shares because of your performance. You can trick them for a day, a week, a month or maybe even a year, but eventually it will blow up in your face."

High-tech can do well. Next door is Check Point Software Technologies, which reached $5 billion before you.

"Yes, but how many are there like that? One in a thousand. I'm not good at [high-tech], and I'm not going to start learning it now. I find satisfaction in other areas."

You are optimistic about Africa Israel. Why do you have only 66 percent of its shares?

"I don't understand your question. How many publicly traded companies are there where the owners hold 66 percent?"

Yitzhak Tshuva has 81.5 percent of Delek Group.

"But look, I have partners. With Bank Leumi, we hold 84 percent together, meaning there aren't enough shares floating out there for trade. On the contrary, it would be healthier for me to reduce my shareholding to 51 percent. But what would I do with the money if I sell? I invest in Africa Israel, I control it and I know the money is in a safe place."

How much do you own of the diamond business?

"100 percent. I have no partners. I do have partners in the mines, but I am not talking about my private business. I don't think we'll talk about diamonds today."

Can you split your personality like that? Africa Israel is a publicly registered company that exposes everything, while you personally have private business around the world and expose nothing.

"As a public company Africa Israel has to disclose all to the public. Diamonds are my private business by and like Stef [Wertheimer], I don't have to report. People can call it a black hole. You at Haaretz should know better. Anyway, in diamonds, I am as famous as it gets, unfortunately. Everybody knows what I am doing."

What do they know?

"They know I am a born diamond producer. In 1996 the DeBeers cartel announced it wouldn't work with me any more if I buy raw diamonds in Russia. They threatened to rescind my right to buy from the cartel. Unless you buy from them, you can't make it. They thought they'd shut down my business. I told myself I wouldn't let anybody else run my business, I wouldn't be dependent on the cartel. I waived my right to buy diamonds from them, I signed a contract to buy stones with the Russians, they believed in me and you see the results today."

You are the biggest private diamond producer in the world? [Leviev is silent. Abashed, he does not answer but gestures with his hand: Yes.] Is business good?

"There are two kinds of business, mining and polishing. The difference between them is huge. In mines, you have to invest in good geology, research and technology and the risk is relatively low. In polishing, unless you're the best, you won't make it. It requires a huge amount of know-how, a lot of technology, it is a tough mission. In diamonds, I'm the No. 1 in technological ability.

"Diamonds is complicated, it isn't real estate, where the math is simple. You buy a plot of land at a certain price, you know how much construction costs, you know yields and profits. In diamonds you have 5,000 kinds of stones. You can have two stones that look just alike, but one is worth $100 million and the other $20 million."

Where is your strength?

"My undersea diamond mining fleet is the second-biggest in the world."

Who's first?

"DeBeers."

[Leviev notices our questioning look and gestures to an aide. From a laptop, he whips out a photo-presentation of Samicor, a company of Leviev's company LL Mining. Samicor won a Namibian government contract to mine stones at ocean depths of 80 to 100 meters offshore. The film shows Leviev's fleet of giant seven-story ships, equipped with 60-ton robots that work underwater. Leviev's license covers 14,000 square meters, where he has discovered 12 million carats of diamonds so far.]

How much is 12 million carats of diamonds worth?

"Three billion dollars."

Where you do business, you maintain good relations with the governments.

"Let me tell you a story. A few months ago we were in Miami, looking at investments. Suddenly we were told the mayor wanted to meet with us. We came to city hall, went into a room, and the mayor, his deputy and other top officials were there. We were told, `We want you to invest,' and they told us about projects. They didn't let go. I said to Pini Cohen [Africa Israel's chief executive] - let's get out of here. They'll say we're trying to get things from the city. But it's the other way around, they're the ones chasing us, not letting go, which is why we bought $90 million worth of land there over a few months. They chase all potential investors ... I don't want any favors from any politicians or mayors. I don't want accusations of corruption."

How did you win your mining concession in Namibia?

"Namibia publishes mining tenders. The trick isn't in winning tenders; there are companies that win and then can't do the work, and companies that don't meet their targets lose their licenses. The trick isn't in winning the tender, it's in operating the concession."

You have a lot of pictures with a good friend Vladimir Putin. Your relations with him can't have hurt your business in Russia.

"Russia? The day I have to rely on contacts for my business is the day I have to get out. I prefer to rely on money and know-how."

Your Russian business is not advanced by your contacts with Putin?

"On the contrary, because of my contacts there are a lot of areas I didn't enter in Russia. If I'd gotten into them, like oil, I could have been as rich as the oligarchs."

You aren't far off. You are estimated to have $3 billion.

"What's the difference between $100 million and $5 billion? I don't think there is one. It is all in how you see the world."

How much are you worth?

"I don't count the money."

You said at the press conference the other day that you want much more, but don't mean to buy a yacht meanwhile.

"The moment I'm satisfied, I'll sell the company. I am not satisfied yet. I am not buying a yacht."

In that presentation we saw ships a lot bigger than yachts.

"Yes, the problem is the smell of grease."

Speaking of smells, we read a lot of reports that working conditions are abominable in this kind of business.

"If I am not mistaken, all the human rights organizations, like Global Witness, write that Leviev's mines should be taken as examples. We pay five times the norm over there. We take care of agriculture, and a ranch where meat and milk are produced. We feed the villages and we do it well, because that is what Judaism teaches, to help people. I think the things you're talking about happened in the past. Today's big companies do not exploit workers any more. In Africa the gaps are closing; business has to rely on common sense, not political contacts or exploiting cheap manpower."

A report in a foreign paper said you have dubious contacts and note your many bodyguards in Russia.

"I go to the Ukraine and the mayor shows his esteem, coming with his entourage, honoring me for maintaining dozens of soup kitchens in the city. I am proud of it - that Jews are honored. So I have bodyguards there. I do not have any bodyguards in Israel because I don't owe anything to anybody and hurt nobody."

How did your partnership with Arkady Gaidamak fit into your worldview?

"I don't want to get into that. What's wrong with Arkady?"

You don't share the opinion of the foreign press.

"I looked for material, any legal steps, any trial regarding him, any charges, anything. I asked people. In my opinion he's an honest, straight man until proven otherwise."

Do you do business with him today?

"No."

Back to Africa Israel. You plan major investments. Are you considering major businesses up for sale, such as Bezeq?

"Not interested."

At the press conference you expressed doubt about the economy exiting the recession. Dor-Alon, in which you are invested, has made massive investments overseas, and in Israel, too, using credit. Aren't you concerned?

"Dor-Alon has a substantial infrastructure and platform. Yes, it is highly exposed, but that is exploited sensibly. We have nothing to worry about."

Some people say U.S. growth is relying on a credit bubble.

"Yes, that certainly could be if interest rates rise quickly. That is why most of our projects in the U.S. are short-term. We build and sell. Income from renting properties is not that great, so if prices sink 30 or 40 percent, we won't lose out. Our risk is negligible."

You are constantly reducing your exposure to Israel.

"No, we are continuing to invest in Israel. After the Trans-Israel Highway, just yesterday we signed the light-rail deal. We are still building apartments in Israel, and note that we haven't sold any assets [in Israel] yet. The tremendous amount of land Africa Israel bought is still there. In 1997 these lands were worth $350 million gross, and today they're worth $100 million less, but we didn't sell to pretty up our balance sheet."

How many employees do you have?

"A lot. Tens of thousands."

Who manages your diamond business?

"My brother Moshe Leviev, who's 34. I have another brother, Shmuel, he's in diamonds but he has a private business unconnected with mine."

How old are you?

"I was born in 1956."

You may not have bought a yacht, but you don't move without your private jet.

"Not true. I take El Al to New York. An hour of flying time costs $4,000 in my private jet. A trip to New York would cost $40,000. Other Israeli managers can afford it, who register the plane to their publicly traded company. I prefer to pay $5,000 for a first-class ticket and not squander the money."

Given all your business around the world and your ambitious goals, do you have leisure time at all?

"I have time for everything. Even to spend two hours with you."

[Leviev's aide had slipped out of the room a few moments before, and returned bearing three slim boxes. He presents them to Leviev. For the first time since the interview began, Leviev looks emotional. He opens the first box and extracts a big diamond pendant.]

"You don't understand anything about diamonds. To you it's all the same," he chides. "This is a Vivid corporation stone" (that is, it belongs to one of his companies). "It is the No. 1 company for rare diamonds in the world." He takes out another pendant, a bigger one.

How much is a diamond like that worth?

"You are lucky you don't know a thing about diamonds. A diamond merchant sitting here would have fainted. This pendant is worth $10 million, and it could sell for, oh, about $14 million, $15 million."

[We gulp and keep silent. Finally, we recover.]

Who buys $15-million stones?

"Nouveau-riche people from Japan, Russia, the Ukraine, China and, of course, Arabs. We opened a rare diamond store in Dubai. The whole world knows that if you want diamonds, you come to us."

Diamonds like that. How do you sell them, by auction?

"No, Sotheby's chases us but the moment you place a gem like that for auction, its value drops. It isn't special any more. These are diamonds we don't show, because the people who want diamonds like that don't want publicity."